Bernard Arnault Says LVMH's 22.6% Stake in Hermès Was 'Unexpected'

LVMH and Hermès are in the midst of an ugly legal battle over LVMH's apparent relentless pursuit of Hermès and the potentially unlawful ways in which the luxury conglomerate came into 22.6% of the heritage brand.
While LVMH's investments have been described as a gradual hostile takeover, Bernard Arnault now insists that is not the case. In fact, it wasn't even on purpose!

While LVMH's investments have been described as a gradual hostile takeover, Bernard Arnault now insists that is not the case. In fact, it wasn't even on purpose!

“You know, we found ourselves owning shares in this company…unexpectedly," Arnault said at LVMH's annual meeting (according to WWD). "We had not planned to be shareholders in this firm. We made a financial investment, and that financial investment had an outcome that we had not expected.”

He also insists that he does not plan to increase his stake in the family-owned luxury brand. "We have no intention at all of increasing our stake to play a role in this company. We want instead to be friendly supporters of one of France’s finest companies — and that’s all," he said.

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It's the most we've heard from LVMH on the matter, likely due to the pending legal battle, which he did not directly address. Following Hermes's suit against LVMH for insider trading, collusion, and manipulating stock prices, LVMH filed a suit of its own against Hermès for slander, blackmail, and unfair competition.

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It's Arnault's second attempt this month at saving face--last week he announced he had withdrawn his Belgian citizenship application amidst speculation he intended to escape France's increasing taxes.

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Well this is unexpected.
LVMH was recently fined $10.4 million over the way in which it acquired a 17% stake in Hermès (Hermès alleges LVMH came by the shares unlawfully, LVMH said they acquired the shares "unexpectedly"). In addition to appealing that decision, LVMH filed a lawsuit against an Hermes manager, most likely for alleging publicly that LVMH had come into its stake in Hermès in fraudulent ways. At the time, LVMH had a 22.6% stake in Hermès.
Now, LVMH has a 23.1% stake.

LVMH now owns 22.3 percent of Hermès and the Hermes family is doing whatever they can to prevent that percentage from rising.
Ever since LVMH bought a huge stake in Hermès in 2010, Hermès, an old luxury label rooted in craftsmanship and tradition, has worried about a hostile takeover by the French conglomerate. Shortly after the purchase, Hermès essentially told Bernard Arnault to back off, saying it was a "cultural battle," not a financial one. Last year, Hermès created a separate family holding company that controls over 50% of shares and protects them from LVMH.
And now Hermès has made another move to protect themselves.

Execs at Hermes told French newspaper Le Figaro that they aren't happy about LVMH's sudden interest in the luxury group.
"The family has clearly and unanimously said: If you want to be friendly, Mister Arnault, you need to withdraw," said Bertrand Puech, a fifth-generation descendant of founder Thierry Hermes.
LVMH denies that they'd like to acquire the company, of which they bought over $2 billion in shares last month. But it's obvious that a hostile takeover isn't completely out of the question.

Twenty-seven year old French designer Maxime Simoens may not be going to Dior anytime soon, but LVMH CEO Bernard Arnault may still be courting him for something. WWD's Miles Socha is reporting that Arnault is investing in Simoens' eponymous label, which is only two years old. Quite a departure from Arnault's recent targets like Bulgari and Hermès.